Great article: What the Top US companies pay in taxes.
The reader is meant to get fired up by the fact that these hugely profitable corporations aren’t paying Uncle Sam taxes.
Oh, they’re still paying taxes. Billions of taxes. Just not in the United States. That’s because companies liek Wal-Mart, General Electric, AT&T and so forth have overseas divisions and can have the profits show up in any of those countries – countries with lower tax rates.
How did this happen? It's complicated. GE's tax return is the largest the IRS deals with each year--some 24,000 pages if printed out. Its annual report filed with the Securities and Exchange Commission weighs in at more than 700 pages.
Inside you'll find that GE in effect consists of two divisions: General Electric Capital and everything else. The everything else--maker of engines, power plants, TV shows and the like--would have paid a 22% tax rate if it was a standalone company.
It's GE Capital that keeps the overall tax bill so low. Over the last two years, GE Capital has displayed an uncanny ability to lose lots of money in the U.S. (posting a $6.5 billion loss in 2009), and make lots of money overseas (a $4.3 billion gain). Not only do the U.S. losses balance out the overseas gains, but GE can defer taxes on that overseas income indefinitely. The timing of big deductions for depreciation in GE Capital's equipment leasing business also provides a tax benefit, as will loan losses left over from the credit crunch.
I’ve written before on this issue: The people who do stuff are in control. If the government overtaxes them, they will find another way.
This is why time and time again we have seen that when you lower taxes you see higher tax revenue.
Read the whole article: What the Top US companies pay in taxes.